Trade forms the backbone of the world’s economies, spurring investment, job creation, economic growth, and raising standards of living.
Global trade is being increasingly disrupted as tariff tensions, political unpredictability, protectionist policies and regulatory uncertainty challenge established business models and trade relationships.
The resulting inefficiencies were challenging when the trade environment was stable. But in our increasingly volatile times with COVID-19, Brexit as well as trade and political tensions at both local and global levels, the stakes are far higher.
Now should be a breakthrough era for international trade, as technological advances are making new forms of business possible, built on a foundation of data and insight. EY professionals can help you build an integrated approach by:
- Shaping responses to changing global tariffs and trading relationships
- Reducing cost, risk and delays from your trade network
- Driving better insights through data
- Reimagining your supply chain operating model
- Leveraging technologies
EY Global Trade Updates
TradeFlash October 2023
Welcome to the newest edition of the TradeFlash newsletter, a roundup of the latest developments in global trade around the world.
Global Trade trends — including trade disruption, customs valuation, transfer pricing, and the interplay between trade policy and the ESG agenda — will continue to influence the trade policies of governments and the trade strategies of corporations into 2024 and beyond.
Refocusing on the global trade functional organization
As a result of multiple years of trade disruption and geopolitical tensions, companies are recalibrating, refocusing and re-establishing their interest in their global trade function’s organizational design. Consequently, as a “new norm” is established, clients have been raising topics, such as:
- Where should global trade sit within the company?
- What should be the scope of the global trade function?
- Should operational activities be separated from advisory and compliance activities?
- Should export be owned by legal?
These are a few of the key questions our EY tax professionals have contemplated with global trade executives and agree should be further examined.
TradeWatch Global Insights
The Global Insights section of our latest TradeWatch publication covers a wide range of trade topics and developments from around the world. On the agenda of this Issue 2:
- Refocusing on the global trade functional organization — a global trade perspective
- ‘Future-proofing’ the customs and trade function
TradeWatch Americas Insights
Under our Americas chapter, focus is on:
- Canada: Border Services Agency (CBSA) Assessment and Revenue Management (CARM) Release 2 update
- Latin America: maximizing the benefits of nearshoring — a practical guide to Latin America’s FTAs
- US: Section 301 update
TradeWatch EMEIA Insights
Under the EMEIA chapter, authors discuss the impact on business of some key topics, including:
- EU: Customs legislation reform
- Kingdom of Saudi Arabia: growing network of special economic zones
- South Africa: between importers and clearing agents, who is responsible for customs compliance?
- UK: EY report on TradeTech and the digitalization of trade
Sustainability and ESG Insights
The impact of sustainability and environmental, social and governance (ESG) policies on trade is another key trend that we continue to explore. In this edition, we focus on:
- EU: final regulations published for new carbon border adjustment mechanisms (CBAMs) and Emission Trading System (ETS) revisions;
- UK: CBAM developments;
- The implications of an EU regulation aimed at minimizing deforestation risks associated with products that are placed on or exported from the EU market; and
- EU: Fight against global deforestation.
Companies import and export a wide range of materials and finished goods on a daily basis. Beyond the logistical and supply chain considerations for such movements, companies may incur additional costs for customs duties and fees at time of import. The use of US Foreign Trade Zones (FTZs) can help to mitigate those costs.
With an FTZ, goods may be admitted for storage, manipulation or manufacturing without triggering the payment of customs duty when the goods arrive in the US. Only when the goods are subsequently removed from the FTZ to enter US Commerce may the goods be subject to duties. Goods ultimately removed from the FTZ for re-export avoid duty payment altogether.
Based on the recent Annual Report of the Foreign-Trade Zones Board to the US Congress, there was $767b in inventory admitted into FTZs, and $111b in merchandise exported to foreign countries. In addition, the number of people employed in FTZs is sizable. The report noted that over 460,000 people are employed at 3,300 companies utilizing the FTZ program.
As demonstrated by these figures and the anticipated increased growth of international trade, the FTZs program is a strategic tool used by US manufacturers and distributors to reduce customs and supply chain costs, promote US competitiveness and generate additional US jobs.
We have a team of Foreign Trade Zone consultants with a deep understanding of the rules governing FTZs. We can help your business:
- Evaluate the potential benefit of an FTZ based on your unique supply chain structure
- Apply for and establish an FTZ by working with local jurisdictions, the FTZ Board and US Customs
- Conduct trade operations in a compliant and efficient manner by providing centralized, managed services that help you redeploy key resources, shifting their focus from repetitive, transactional activities to what matters most — creating value for the organization
- Leverage our EY Trade Connect modular trade technology platform including the FTZ inventory system module
- Navigate the regulatory and compliance requirements associated with operating an FTZ